Broadcom shares AVGO rose 4.6% on Thursday as investors assessed the potential impact of Nvidia’s leadership turmoil on the broader artificial intelligence sector.
The stock’s gains came after Nvidia’s board confirmed the resignation of chief executive Jensen Huang.
The development has raised questions about whether hyperscalers that design their own chips could rely more heavily on alternative suppliers, including Broadcom, while Nvidia navigates a leadership transition.
However, market participants have so far appeared to distinguish between company-specific concerns at Nvidia and the broader outlook for AI-related stocks.
Broadcom could benefit as investors assess Nvidia turmoil
Broadcom is among the semiconductor companies that investors may consider as they assess potential alternatives to Nvidia.
Hyperscalers developing their own chips could lean more heavily on Broadcom, particularly as Nvidia works through its leadership transition.
The company also features in Anthropic’s amended S-1 filing as a buyer in a $26 billion share placement.
According to the filing, Broadcom is taking 13,513,513 Class N shares, worth approximately $1 billion at the $74 midpoint.
The placement also includes Google, Nvidia, AMD, Micron, Microsoft and TSMC.
Pepperstone analyst Chris Weston said the market appeared to be treating Nvidia’s problems as separate from the broader AI investment theme.
“The market appears to be distinguishing between a problem for Nvidia and a problem for AI. That’s an important distinction for the broader technology trade,” Weston said.
He added that, despite the interconnected nature of the AI ecosystem, market movements suggested investors were viewing the situation primarily as a company-specific risk for Nvidia.
Tom Lee maintains technology stocks have bottomed
Fundstrat’s Tom Lee also reiterated his view that technology stocks had already reached a bottom following last week’s market selloff.
“We are sticking with the thesis that Technology stocks bottomed last week,” Lee said on Thursday, in a CNBC interview. He added that Huang’s exit “does not change our view.”
Last week, Lee had identified memory, semiconductor, data centre and neocloud stocks as potential beneficiaries of a rebound following the midterm election results.
He argued that the previous week’s selloff marked a low point, pointing to heavy losses at several prominent hedge funds as evidence that an internal market bottom had formed.
Lee described the episode as a wave of selling and forced liquidations.
He also said the sharp decline was unusual because hedge funds generally operate with beta-neutral strategies and should not necessarily experience substantial losses when technology stocks fall.
According to Lee, the market’s response to negative developments is an important indicator of whether a bottom has formed.
“History shows markets bottom on bad news,” he wrote, arguing that stocks ceasing to fall despite negative headlines can signal that selling pressure has been exhausted.
Wall Street analysts maintain positive Broadcom ratings
Broadcom has also retained support from several Wall Street analysts.
Bank of America and JPMorgan maintained their Buy ratings on the stock on Wednesday.
D.A. Davidson upgraded Broadcom to Buy in a report issued on October 27, setting a price target of $400.
Barclays analyst Thomas O’Malley also maintained a Buy rating on Broadcom last week and set a price target of $500.
The combination of analyst support and potential demand from hyperscalers developing custom chips has kept Broadcom in focus as investors assess the implications of Nvidia’s leadership change.